Q:

Brian invests $10,000 in an account earning 4% interest, compounded annually for 10 years. Five years after Brian's initial investment, Chris invests $10,000 in an account earning 7% interest, compounded annually for 5 years. Given that no additional deposits are made, compare the balances of the two accounts after the interest period ends for each account. (round to the nearest dollar)

Accepted Solution

A:
Answer: Brian has $776 more account in his account than Chris.Step-by-step explanation:Compound interest Formula:[tex]A=P(1+r)^t[/tex][tex]I[/tex]= A-PA= Amount after t yearsP= Initial amountr= Rate of interestt= Time in yearGiven that,Brian invests $10,000 in an account earning 4% interest, compounded annually for 10 years.Here P = $10,000 , r= 4%=0.04, t=10 yearsThe amount in his account after 10 years is[tex]A=10000(1+0.04)^{10}[/tex]    =$14802.44   ≈$14802Five years after Brian's investment,Chris invests $10,000 in an account earning 7% interest, compounded annually for 5 years.Here P = $10,000 , r= 7%=0.07, t=5 yearsThe amount in his account after 5 years is[tex]A=10000(1+0.07)^{5}[/tex]    =$14025.51   ≈$14026From the it is cleared that Brian has $(14802-14026)=$776 more account in his account than Chris.